I recently set up a friends iPhone so that they could access their hotmail account through the mail app. Everything went well, until we decided to set up 2-Step Auth. Outlook uses the authenticator app from Google to supply the code, however, this would not sync with the Outlook server for quite some time. I eventually figured out that the lag was because the iPhone was not synced with a time server (through cellular network time) and therefore the app would not sync with the outlook server. Consequently, once I updated the setting on the iPhone, access was obtained with the code from the Authenticator app.